12 loss-making projects fall deeper into debts
As of December 31, 2017, the total debts of the 12 loss-making projects increased by VND3.44 trillion ($150.8 million) to VND58.5 trillion ($2.56 billion), almost all of which is threatening to become bad debts.
According to newswire Vnexpress, after a year of implementing solutions in loss-making projects following a request from the National Assembly, with the exception of Lao Cai iron and steel plant and DAP 1 Haiphong fertiliser plant which managed to turn profit, the projects racked up VND18.67 trillion ($819.8 million) of accumulated losses, up VND2.55 trillion ($111.9 million) on-year.
With this massive loss, it will be difficult to pay principal and interest to Vietnam Development Bank (VDB) and other lenders.
Project loans from local banks amounted to VND41.8 trillion ($1.83 billion), including VND16.9 trillion ($1.83 billion) from VDB. Foreign loans guaranteed by the government totalled VND6.6 trillion and were used to fund Dung Quat Shipbuilding Industry Company Limited, Ninh Binh fertiliser plant, and Phuong Nam paper pulp mill.
The Ministry of Industry and Trade (MoIT) said the projects’ outstanding loans were still high, especially those borrowed by Dinh Vu polyester fibre factory, Quy Xa iron ore mining and quarrying project, and Lao Cai iron and steel plant, as well as Ha Bac fertiliser plant.
As of December 31, 2017, the 12 inefficient projects’ total equity decreased by VND4 trillion ($175.6 million) against 2016.
According to MoIT, the total initial investment in these 12 projects was some VND43.7 trillion ($1.91 billion), which was later adjusted to VND63.6 trillion ($2.79 billion) (an increase of 45.65 per cent). Of this, equity was VND14.4 trillion ($632.3 million), accounting for 22.56 per cent, while loans made up 74.6 per cent with about VND47.5 trillion ($2.08 billion). The remaining 2.84 per cent came from other sources.
At present, Phuong Nam pulp mill is on sale, and Bio-Ethanol Dung Quat plant has suspended operations after defaulting on its debts.
Besides, Thai Nguyen Iron and Steel plant-phase 2 is in limbo. Thai Nguyen Iron and Steel JSC (Tisco), the investor of Thai Nguyen Iron and Steel plant, considered taking Chinese contractor China Metallurgical Group Corporation (MCC) to court to deal with the overlong dispute over an engineering-procurement-construction (EPC) contract once and for all.
The remaining projects have either maintained or resumed operations.